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Oil-for-Food Programme

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The Oil-for-Food Programme, established by the United Nations in 1995 (under UN Security Council Resolution 986) and terminated in late 2003, was intended to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs for ordinary Iraqi citizens without allowing Iraq to rebuild its military.

The program was introduced by the US Clinton Administration in 1995, as a response to arguments that ordinary Iraqi citizens were inordinately affected by the international economic sanctions aimed at the demilitarisation of Saddam Hussein's Iraq, imposed in the wake of the first Gulf War. The sanctions were discontinued in 2003 after the United States invasion of Iraq, and the humanitarian functions turned over to the Coalition Provisional Authority.

As the program ended, there were revelations of corruption involving the funds.

Background and design

The Oil-for-Food Programme was instituted to relieve the extended suffering of civilians as the result of the comprehensive sanctions on Iraq from the UN, following Iraq's invasion of Kuwait in August 1990.

UN Resolution 706 of 15 August 1991 was introduced to allow the sale of Iraqi oil in exchange for food. (PDF of resolution 706)

UN Resolution 712 of 19 September 1991 confirmed that Iraq could sell up to $1.6 billion US in oil to fund an Oil-For-Food Programme. (PDF of Resolution 712)

After an initial refusal, Iraq signed a Memorandum of Understanding (MOU) in May 1996 for arrangements for the implementation of that resolution to be taken.

The Oil-for-Food Programme started in December 1996, and the first shipments of food arrived in March 1997. Some 60 percent of Iraq's 26 million people were solely dependent on rations from the oil-for-food plan.

The program used an escrow system: oil exported from Iraq was paid for by the recipient into an escrow account possessed until 2001 by BNP Paribas bank, rather than to the Iraqi government (Anglo-Iraqi billionaire Nadhmi Auchi is BNP Paribas' major single shareholder through his firm General Mediterranean Holdings). The money was then apportioned to pay for war reparations to Kuwait and ongoing coalition and United Nations operations within Iraq, with the remainder (and majority of the revenue) available to the Iraqi government for use in purchasing regulated items.

The Iraqi government was then permitted to purchase items that were not embargoed under the economic sanctions. Certain items, such as raw foodstuffs, were expedited for immediate shipment, but requests for most items, including such simple things as pencils and folic acid, were reviewed in a process that typically took about six months before shipment was authorised. Items deemed to have any potential application in chemical, biological, and nuclear weapons systems development were not available to the regime, regardless of what their stated purpose was.

Financial statistics

Over US$65 billion worth of Iraqi oil were sold on the world market. About US$46 billion of these funds were intended to provide for the humanitarian needs of Iraqi people such as food and medicine in the context of international economic sanctions. A considerable amount was spent for Gulf War reparations through a compensation fund (25 percent since December 2000); UN administrative and operational costs for the program (2.2 percent) and costs for the weapons inspection program. However, internal audits have not been made public.[1]

Initial support and criticism

The program was conceived as a way of mitigating the impact on ordinary Iraqis of the sanctions against Iraq. The most fundamental criticism of the program was that this was a stop-gap solution that was bound to strengthen Saddam Hussein's position, potentially preserving the survival of his dictatorship.

Alternatively, if the sanctions were too harmful for Iraqis to sustain, critics argued, the sanctions should be removed (excepting clearly military items). Critics claimed that the Oil-for-Food Programme was responsible, under the blockage of dual-use equipment, for preventing Iraq from repairing the water purification and medical systems destroyed by the initial sanctions and in the 1991 Gulf War, and others challenged the program on the grounds that it would not permit Iraq to import the food and medicine necessary to prevent millions of easily preventable deaths. Former program heads such as Hans von Sponeck questioned whether the sanctions should exist at all. Von Sponeck, speaking in Berkeley in late 2001, decried the proposed "Smart Sanctions", stating, "What is proposed at this point in fact amounts to a tightening of the rope around the neck of the average Iraqi citizen"; claimed that the sanctions were causing the death of 150 Iraqi children per day; and accused the US and Britain of arrogance toward Iraq, such as refusing to let it pay its UN and OPEC dues and blocking Iraqi attempts at negotiation.

Supporters viewed the program as a way to keep Saddam Hussein in check without resorting to war.

The Clinton Administration opposed further liberalization of the proposal, which was pursued by both Iraq and France.

End of the program

Shortly before US and British forces invaded Iraq, UN Secretary-General Kofi Annan suspended the program and evacuated more than 300 workers monitoring the distribution of supplies.

On 28 March 2003, Secretary-General Annan, the United States, and Britain asked the Security Council to ensure that nearly US$10 billion in goods Iraq ordered and already approved, including US$2.4 billion for food, could enter the country when conditions allow. The resolution under discussion made clear that the chief responsibility for addressing humanitarian consequences of the war would fall to the United States and Britain if they took control of the country. This refers to the 1949 Fourth Geneva Convention on the responsibilities of the occupying power.

On 22 May 2003, UN Security Council Resolution 1483 granted authority to the Coalition Provisional Authority to use Iraq's oil revenue. The program's remaining funds of $10 billion were transferred over a 6 month winding-up period to the Development Fund for Iraq under the Coalition Provisional Authority's control; this represented 14% of the program's total income over 5 years.

The program was formally terminated on 21 November 2003 and its major functions were turned over to the Coalition Provisional Authority. [3]

Abuse

In addition to criticism of the basic approach, the program suffered from widespread corruption and abuse. Throughout its existence, the program was dogged by accusations that some of its profits were unlawfully diverted to the government of Iraq and to UN officials. These accusations were made in many countries, including the US and Norway. [4]

Benon Sevan of Cyprus, who headed the program, defended it, claiming that it had only a 2.2% administrative cost and that it was subject to more than 100 audits (internal and external), blaming restrictions from the Security Council for making the situation difficult. He also claimed that 90% of Iraq's population relied on the program for its monthly food basket. While Benon Sevan was in charge of the program, he stonewalled efforts to review and investigate the program. [5] He ordered his staff that complaints about illegal payoffs should be formally filed with the whistleblower's country, making them public and allowing Iraq to bar any whistleblowers. In 2000, Dileep Nair, the UN corruption watchdog, wanted to determine the program's level of vulnerability. Sevan, along with UN Deputy Secretary-General Louise Frechette, rejected any such investigation, claiming that it would be too expensive to be worthwhile. Curiously, Sevan ordered the shredding of years' worth of documents concerning the program.[2]

In response to these criticisms, and to evidence acquired after the United States invasion of Iraq, UN Secretary-General Kofi Annan appointed a UN investigatory panel, headed by American Paul Volcker, to review the program.

Starting in April 2004,[6] accusations were made that skimmed profits were being used to buy influence at the UN and with Kofi Annan himself.

According to an interim report released on February 3, 2005 by former Federal Reserve chairman Paul Volcker's commission (see #Investigations below), much of the food aid supplied under the program "was unfit for human consumption". The report concluded that Sevan had accepted nearly $150,000 in bribes over the course of the program, and in 2005 he was suspended from his position at the United Nations as a result of the investigation of fraud in the program. [7]

Peter van Walsum, the now-retired Ambassador of the Netherlands to the United Nations and chairman of the Iraq sanctions committee from 1999 to 2000, speculated in a recent book that Iraq deliberately divided the Security Council by awarding contracts to France, Russia, and China but not to the United Kingdom and the United States. He also stated he encountered a number of cases in which he felt the lack of Iraqi cooperation was designed to exacerbate the suffering of its own people. He also claimed that it was his opinion that the sanctions were not an effective deterrent.

Until 2001, the money for the Oil-for-Food Programme transited through the BNP Paribas bank, whose main private share-holder is Iraqi-born Nadhmi Auchi, a man estimated to be worth about $1 billion according to Forbes, and ranks 13th in Britain according to The Guardian. Auchi received a 15-month suspended sentence for his involvement in the Elf scandal, which has been qualified by the British newspaper as "the biggest fraud inquiry in Europe since the Second World War. Elf became a private bank for its executives who spent £200 million on political favours, mistresses, jewellery, fine art, villas and apartments".[3] Elf, an oil company, merged with TotalFina to become Total S.A. in 2003.

al Mada list

One of the earliest allegations of wrongdoing in the program surfaced on 25 January 2004, when al Mada, a daily newspaper in Iraq, published a list of individuals and organizations alleged to have received oil sales contracts via the UN's Oil-for-Food Programme. The list came from over 15,000 documents which were reportedly found in the state-owned Iraqi oil corporation, which had close links to the Iraqi Oil Ministry. The oil ministry was headed by allies of Ahmed Chalabi, a controversial member of the Iraqi governing council who had been widely criticized for supplying the US with bogus information during the lead-up to the war. Chalabi's alleged involvement and the initial lack of corroborating evidence placed doubt on the accuracy of the al Mada list.

Named in the list of beneficiaries were British MP George Galloway and his charity, the Mariam Fund; former French Interior Minister Charles Pasqua; and Shaker al-Kaffaji, an Iraqi-American businessman who contributed US$400,000 to produce a film by ex-UN inspector Scott Ritter discrediting the weapons searches. India's foreign minister was removed from office because of his role in the scandal. Many prominent Russian firms and individuals were also included on the al Mada list. Even the Russian Orthodox Church was supposedly involved in illegal oil trading. The former assistant to the Vatican secretary of state, Reverend Jean-Marie Benjamin, is said to have received rights to sell 4.5 million barrels. George Galloway subsequently won two libel actions against the Christian Science Monitor and Daily Telegraph, which reported the allegations.[8][9]

In an interview with the Financial Times, Khafaji admitted that he received and sold Iraqi oil contracts to Italtech, an Italian-based oil trading company, which resold the oil to Houston-based Bayoil, run by David B. Chalmers. Khafaji claims that Ritter was unaware of this activity.[10]

The president of Oilexco Ltd, Arthur Millholland, whose name also appeared on the al Mada, list denied any wrongdoing, but confirms the charges that illegal surcharges were being paid to the Iraqi government by contractors. [11] However, the al Mada list does not discuss bribes paid to Iraq - it discusses bribes paid to individuals so that they would support Iraq. Few deny that in Iraq, like in many third-world countries, bribes and kickbacks were regularly paid to the leadership in order to get contracts, but some suggest that kickbacks would normally not occur in such countries when a UN-run program was involved.

Operation of the scheme

The scheme is alleged to have worked thusly: individuals and organizations sympathetic to the Iraqi regime, or those just easily bribed, were offered oil contracts through the Oil-for-Food Programme. These contracts for Iraqi oil could then be sold on the open world market and the seller was allowed to keep a transaction fee, said to be between $0.15 and $0.50/barrel (0.94 and 3.14 $/m³) of oil sold. The seller was then to refund the Iraqi government a certain percentage of the commission.

Contracts to sell Iraq humanitarian goods through the Oil-for-Food Programme were given to companies and individuals based on their willingness to kick back a certain percentage of the contract profits to the Iraqi regime. Companies that sold commodities via the Oil-for-Food Programme were overcharging by up to 10%, with part of the overcharged amount being diverted into private bank accounts for Saddam Hussein and other regime officials and the other part being kept by the supplier.

The involvement of the UN itself in the scandal began in February 2004 after the name of Benon Sevan, executive director of the Oil-for-Food Programme, appeared on the Iraqi Oil Ministry's documents. Sevan allegedly was given vouchers for at least 11,000,000 barrels (1,700,000 m³) of oil, worth some $3.5 million. Sevan has denied the charges.

BNP

The sole bank handling funds transfers for the Oil-for-Food Programme was the New York branch of the Banque Nationale de Paris-Paribas, or BNP Paribas. This French bank was the sole bank administering the $64 billion UN program. An investigation by the US House Committee on International Relations found that BNP Paribas made payments without proof that goods were delivered and sanctioned payments to third parties not identified as authorized recipients. Investigators estimate that the bank received more than $700 million in fees under the UN program that began in 1996 and ended after the ousting of Saddam in March 2003. [12] Nadhmi Auchi's General Mediterranean Holdings is BNP's major single shareholder.

Duelfer investigation

The Duelfer report, released on 30 September 2004, described in a key finding the impact of the Oil-for-Food Programme on Saddam's regime:

• The introduction of the Oil-For-Food Programme (OFF) in late 1996 was a key turning point for the Regime. OFF rescued Baghdad’s economy from a terminal decline created by sanctions. The Regime quickly came to see that OFF could be corrupted to acquire foreign exchange both to further undermine sanctions and to provide the means to enhance dual-use infrastructure and potential WMD-related development.[vol. I, p.1]

The final official version of the report cites only France, Russia and Canada (countries who were also strongly anti-war) as violators who paid kickbacks while at the same time, by order of attorneys at CIA, specifically censoring out companies from the US originally included by Duelfer. [13] However, the full version of the report, before the U.S. names were removed, was sent to congressional committees and some of it made publicly available. The U.S. companies implicated include Exxon Mobil Corp., ChevronTexaco Corp. and El Paso Corp. [14]

Oil coupons as bribes

The US-funded satellite network Al Hurra broadcast a story on January 6, 2005 detailing allegations that Saddam's regime had bribed news reporters with oil coupons. Reporters named include Ahmed Mansour of Al Jazeera and Hamida Naanaa, a writer based in France and known for her pro-Saddam slant. Two types of oil coupons were used: silver coupons that entitled holders to nine million barrels of oil, and gold coupons that were worth more. Hamida Naanaa is said to have received a gold coupon.[15] Apparently, several jobs offered by United Nations to Long Beach Army, Air Force and Navy Reservist to serve in the United Nations Peace Keeping Forces was offered but not a single reservist was hired but replaced with foreign low paid officers and enlisted. It expected over a billion dollars was siphoned off by the United Nations.

Complaints by Kurds

The Kurds had complained since the start of the program that they were not being paid their fair share of the oil revenues. According to the guidelines set up by the Oil-for-Food Programme, the revenues were to be divided up in such a way as to protect Iraq's predominantly Kurdish regions. The allegations include claims that the Cairo office of the UN's World Health Organization, run by an individual alleged to have received oil sales contracts, managed to stall the building of a new general hospital for the Kurdish city of Sulaymaniya, even though the funds for the project had been available since 1998.

On June 14, 2005, two 1998 memos surfaced that appeared to link Kofi Annan to Cotecna Inspection S.A. The first one described a meeting between Annan and Cotecna while the company was bidding on the program, after which the company raised its bid. A second one mentioned that Cotecna was confident that they would get the bid due to "effective but quiet lobbying" in New York diplomatic circles. The source of the documents was a Cotecna executive.

Used to finance Al-Qaeda

The scandal engulfing the United Nations Procurement Department and the Oil-for-Food Programme involved Al-Qaeda finance operations. FOX News broke the story that Alexander Yakovlev, a Russian official in the UN Procurement Department, was involved; he later resigned and pled guilty to corruption charges. One link was to Ahmed Idris Nasreddin, a man designated as a terrorist financier by the US and the UN. The UN has named Nasreddin as a man "belonging to or affiliated with Al Qaeda." Petra Navigation Group was a company that was on the blacklist of firms blocked from doing business with the U.S. for sanctions-busting activities designed to help Saddam's regime. [16] Several investor in the United States was such as the oil wells on the West Coast were reported to be empty by early 1990 and were owned by Russian business. Some of the properties were transformed by BRAC committees to be mixed properties and require owners to live on the premise in order to get a precentage of oil there. No dividends or services were obtain from 1992 to present due to litegration by CA democratics in 1995. Oil from Iraq were stored in the wells from 1994 to present. Identity theft has long been known and traced to Northern VA and Virginia Beach.

Allegations against George Galloway

The U.S. Subcommittee on Investigations claimed that British Member of Parliament George Galloway, among others, was the recipient of approximately $600,000 of illegal oil kickbacks from the Iraqi regime. During testimony before the committee on May 17, 2005, Galloway stated that the charges were false and part of a diversionary "smoke screen" by pro-Iraq war U.S. politicians designed to deflect attention from the "theft of billions of dollars of Iraq's wealth..." that had occurred under the post-invasion Coalition Provisional Authority. A later October 25, 2005 report [17] prepared by the subcommittee's majority staff claimed to have evidence that Galloway was "false or misleading" during his Senate testimony, and further that his then-wife (since divorced) received some of the kickbacks.[18] A second new element to the accusations is the subcommittee's claim that former Iraqi foreign minister Tariq Aziz, imprisoned without charges in a secret location since early 2003, has verified them. However, Aziz's lawyer Badia Aref states, "these are lies ... he (Aziz) denied this."[19] Galloway continues to deny wrongdoing and challenged the Subcommittee's chairman, Senator Norm Coleman, to charge him with perjury.[20].

Oil for wheat

A report by UN investigator Paul Volcker, released in October 2005, found that the Australian Wheat Board, later AWB Limited, was the biggest single source of kickbacks. In exchange for trouble-free disembarkation of wheat purchased under the Oil-for-Food Programme, the Australian Wheat Board paid 'trucking charges' totaling $AU300 million to Alia. Alia is a real Jordanian trucking company, but one with no role in the distribution of Australian wheat in Iraq. Alia kept a small percentage of 'charges', and passed the remainder to Saddam's government. The AWB was fully compensated for the charges by increases in the price paid; the payments were approved by the Australian Department of Foreign Affairs and Trade. The Australian Government commissioned judge Terence Cole to further inverstigate whether Australian companies had indeed paid kickbacks to the Saddam regime. The Cole Inquiry commenced in December 2005 and is expected to hand down its findings in late 2006. The Cole Inquiry has received testimony from senior Australian Government officials, including Prime Minister John Howard, Deputy Prime Minister Mark Vaile, Foreign Minister Alexander Downer and various officials from the Department of Foreign Affairs and Trade. During the course of the inquiry numerous AWB officials have resigned, including Managing Director Andrew Lindberg. [21] [22]

[23] [24] [25]

Investigations

GAO investigation

After the 2003 Invasion of Iraq and subsequent Coalition victory over the Iraqi army, the US General Accounting Office (GAO) was given the task of finalizing all Oil-for-Food related supply contracts made with the now-defunct regime as well as tracking down the personal fortunes of former regime members. [26] During the execution of this task, the GAO found weaknesses in the program that allowed kickbacks and other sources of wealth for Saddam Hussein.

The GAO estimates that the Saddam Hussein regime generated $10.1 billion in illegal revenues. This figure includes $5.7 billion from oil smuggling and $4.4 billion in illicit surcharges on oil sales and after-sales charges on suppliers. The scale of the fraud was far more extensive than the GAO had previously estimated. A US Department of Defense study, cited by the GAO, evaluated 759 contracts administered through the Oil-for-Food Programme and found that nearly half had been overpriced, by an average of 21 percent [27]. Unlike the 661 committee, members of the Security Council had the authority to launch investigations into contracts and to stop any contract they did not like. The British and the Americans had turned down hundreds of Oil-for-Food contract requests, but these were blocked primarily on the grounds that the items being imported were dual-use technologies.

To quote the GAO report, in its summary:

Both the U.N. Secretary General, through the Office of the Iraqi Program (OIP) and the Security Council, through its sanctions committee for Iraq, were responsible for overseeing the Oil-for-Food Programme. However, the Iraqi government negotiated contracts directly with purchasers of Iraqi oil and suppliers of commodities, which may have been one important factor that allowed Iraq to levy illegal surcharges and commissions.

Joseph A. Christoff, director of international affairs and trade at the General Accounting Office, told a House hearing that UN auditors had refused to release the internal audits of the Oil-for-Food Programme [28]. Benon Sevan, with support from Kofi Annan, had written letters to all former Oil-for-Food contractors asking them to consult Sevan before releasing any documents to GAO or US congressional inquiry panels [29]. Throughout its history, the program had received both complaints from critics saying that it needed to be more open and complaints from companies about proprietary information being disclosed.

The United Nations has denied all requests by the GAO for access to confidential internal audits of the Oil-for-Food Programme.

While attempting to determine the complexity of the Oil-for-Food Programme for an article in the New York Times, investigative journalist Claudia Rosett of the Foundation for the Defense of Democracies and the Hudson Institute discovered that the UN treated details such as the identities of Oil-for-Food contractors; the price, quantity and quality of goods involved in the relief deals; and the identities of the oil buyers and the precise quantities that they received as confidential. The bank statements, the interest paid, and the transactions were all secret as well. [30] Rosett has come under harsh criticism from Denis Halliday [31] and Benon Sevan [32], who have claimed that many of Rosett's claims (such as Oil-for-Food funding the approval of an Olympic stadium, and where responsibility for various issues lay according to the UN resolutions) were incorrect.

The US House Committee on International Relations investigated the Oil-for-Food Programme and discovered that money was provided by Sabah Yassen, the former Iraqi ambassador to Jordan, to pay the families of Palestinian suicide bombers between $15,000 to $25,000.[33] From September 2000 until the invasion of Iraq, the families of Palestinians killed or wounded in the conflict with Israel (including 117 responsible for suicide bombings in Israel) received over $35 million. It is alleged that this money came from the UN Oil-for-Food Programme.

Independent Inquiry Committee

After initial opposition to an investigation, UN Secretary-General Kofi Annan stated on 19 March 2004 that a full independent investigation would be launched. In an official press interview, Annan said "[...] it is highly possible that there has been quite a lot of wrongdoing, but we need to investigate [...] and see who was responsible." "00:00:03". (audio clip, @5:56) However, Annan was emphatic that most of the claims were "outrageous and exaggerated" [34], and that most of the criticisms had to do with things over which the program had no authority.

The following individuals were chosen in April of 2004 to head the United Nations' Independent Inquiry Committee[35]:

On April 22, 2004, the United Nations Security Council passed a unanimous resolution endorsing the Volcker inquiry into corruption in the United Nations Oil-for-Food Programme for Iraq, calling upon all 191 member states to cooperate. (NYT)

A leaked internal UN audit, which surfaced on mineweb.com, shows massive discrepancies between Cotecna reports and UN agency reports for the value of the shipments into northern Iraq. The audit found that Cotecna did no "value" inspections on nearly US$1 billion worth of aid shipments for the Inter-Agency Humanitarian Program into northern Iraq. Benon Sevan was briefed in December 2002 on the findings of the audit. [36]

The audit is available here. Its summary states:

OIOS' overall conclusion is that the management of the Contract has not been adequate and certain provisions of the Contract had not been adhered to. In addition, the incorporation of additional costs, such as rehabilitation of camps in the man-day-rate was an unacceptable arrangement. Also, the contract had been amended prior to its commencement, which was inappropriate. OIP needs to strengthen its management of contracts and the Procurement Division (PD) should ensure that the basis of payment is appropriate in order to avoid additional costs to the Organization

After reading the leaked audit, congressman Henry Hyde wrote to Kofi Annan wondering why "The U.S. Congress — which provides 22 percent of the U.N.'s budget and which has publicly requested copies of the 55 internal audits — should be required to depend on media leaks for source documents."

Interim report results

In a 219-page initial report, the Volcker Commission documented how OIF Chairman Benon Sevan used his position to solicit and receive allocations of oil from Iraq during the years he oversaw the humanitarian relief program. Internal records from SOMO (Iraq 's State Oil Marketing Organization), as well as interviews with former Iraqi officials involved in illicit oil deals, show that Sevan had requested and received allocations of 7.3 million barrels of oil on behalf of a Panama-registered trading company called African Middle East Petroleum Co.

Although the report makes no specific allegations of criminal activity by Sevan, Volcker does not rule out the possibility that charges might be filed by authorities in countries with relevant jurisdiction. The report called Sevan's conduct "ethically improper”, noting that Sevan had received large cash payments totaling $160,000 dollars each year he had headed the program. Sevan claims the money came from an aunt in Cyprus who has since died, but the panel found no evidence to back this claim.

Volcker also reported in January that a review of 58 confidential UN internal OIF audits showed UN officials ignored early signs that humanitarian goods shipped to Iraq before the 2003 Invasion war were given little if any inspections by the Swiss company Cotecna. Cotecna paid Kojo Annan, Kofi Annan's son, consulting fees until November 2003. Volcker said that future reports would deal with questions regarding Kojo Annan. [37]

Investigations by Iraqi Governing Council

International accounting firm KPMG had been selected by the Iraqi Governing Council to investigate the al Mada claims, along with Freshfields Bruckhaus Deringer. It was due to release its findings to the Iraqi Governing Council in May 2004. However, in June 2004, KPMG stopped working on the project because it was owed money by the IGC [38].

The US has been harshly critical of the KPMG probe led by associates of Ahmed Chalabi, accusing it of undermining the main probe established by Paul Bremer. That probe had been run by the head of Iraq's independent Board of Supreme Audit, Ehsan Karim, with assistance from Ernst & Young. The Board of Supreme Audit is within the Iraqi Finance Ministry. In June 2004, Karim's investigation agreed to share information with the Volcker panel. However, on 1 July 2004, Karim was killed by a bomb magnetically attached to his car [39].

Claude Hankes-Drielsma, a British national and longtime friend of Ahmed Chalabi, was appointed by the IGC to coordinate its investigation of the Oil-for-Food Programme. Drielsma testified in front of the US Congress (on 21 April 2004) that the KPMG investigation "is expected to demonstrate the clear link between those countries which were quite ready to support Saddam Hussein's regime for their own financial benefit, at the expense of the Iraqi people, and those that opposed the strict application of sanctions and the overthrow of Saddam". He also testified that Chalabi was in charge of the investigation for the IGC.

In late May 2004, on the same day that Chalabi's offices at the Iraqi National Congress were raided by coalition forces, Drielsma claimed that an individual or individuals hacked into his computer and deleted every file associated with his investigation. He also claimed that "a back-up databank" was also deleted [40]. When asked by Caludia Rosett if he had been physically threatened as well, Drielsma replied with "no comment". Drielsma has also been an outspoken critic of the UN's refusal to release any internal Oil-for-Food audit information to the IGC.

Criminal investigation in France

The French criminal justice system is investigating alleged involvement of two former officials from the French Ministry of Foreign Affairs, Jean-Bernard Mérimée and Serge Boidevaix. The two are accused of having used their extensive network of connections in the Arab world in order to commit "influence peddling" and "corruption of foreign public agents". They have been put under formal criminal investigation by investigating magistrate Philippe Courroye, a famous specialist in cases of corruption and other financial dealings. Both men had retired at the time of the alleged crimes and acted in their personal capacity, not as official envoys of the French government; however, Boidevaix claims that he kept the Ministry of Foreign Affairs informed of his actions in Iraq. The Ministry claims to have warned both men formally in 2001 (during the administration of Lionel Jospin).

Some other people, including Bernard Guillet, an aide to French senator Charles Pasqua, are also under formal investigation. Guillet and Pasqua deny any wrongdoing.

US Senate investigations

US Senator Norm Coleman called for Kofi Annan to resign over the scandal and held a number of hearings on the matter. The most spectacular of these hearings occurred after the subcommittee released a report that accused British Member of Parliament (MP) George Galloway, Russian politician Vladimir Zhirinovsky, and former French Interior Minister Charles Pasqua of receiving oil allocations from Iraq in return for being political allies of Saddam Hussein's regime. Galloway, in an unusual appearance of a British MP before a US Senate subcommittee, responded angrily to the allegations against him in a confrontational public hearing which drew much media attention in both America and Britain [41]. Galloway denied the allegations.

It is estimated that as much as $10 billion to $21.3 billion went unaccounted for and/or was directed to Saddam Hussein and his government in the form of kickbacks and oil smuggling. Record keeping of illegal behaviour is hard to come by and rare at best. To date, only 1 of 54 internal UN audits of the Oil-for-Food Programme have been made public. The UN has refused all requests for its audits.

Staff from the Senate investigations committee presented documentary evidence that the Bush administration was made aware of illegal oil sales and kickbacks paid to the Saddam Hussein regime but could do nothing to stop them. The Senate report concludes the United States ended up with a majority of the oil lifted from Iraq after vendors paid illicit surcharges of 10 cents to 30 cents a barrel to Saddam, though U.S. firms directly purchased less than 1 percent of the crude. However, the two countries to profit most from the program were allegedly France and Russia. These two countries were the strongest supporters of lifting UN-imposed sanctions against Iraq and were also against the 2003 US-led invasion of Iraq.

Alleged US corporate complicity

It has also been alleged that the American government was aware of the scandal and chose to not prevent the smuggling because their allies Turkey and Jordan benefited from the majority of the smuggled oil.

US Senator Carl Levin (D-Michigan) is quoted in an interview for the New York Times as saying, "There is no question that the bulk of the illicit oil revenues came from the open sale of Iraqi oil to Jordan and to Turkey, and that that was a way of going around the Oil-for-Food Programme [and that] we were fully aware of the bypass and looked the other way."[42]

Indictments

On April 14, 2005, a federal grand jury in Manhattan investigating allegations of misconduct in the Oil-for-Food Programme indicted David Bay Chalmers Jr., founder of Houston-based Bayoil USA Inc. and Bayoil Supply & Trading Limited, Ludmil Dionissiev, a Bulgarian citizen who lives in Houston, and John Irving, a British oil trader, for funneling millions of dollars in kickbacks through a foreign front company to an Iraqi-controlled bank account in the United Arab Emirates. Chalmers and Dionissiev were arrested at their homes in Houston, while Irving was set to be extradited from England.[4][5]

On January 6, 2006, South Korean businessman Tongsun Park was arrested by the FBI in Houston after he was indicted for illegally accepting millions of dollars from Iraq in the UN Oil-for-Food Programme. The criminal charges against him were unsealed in a U.S. District Court in Manhattan.[6]

On January 16, 2007, Benon Sevan was indicted by a Manhattan federal prosecutor for taking about $160,000 in bribes. Michael J. Garcia, the U.S. attorney from the Southern District of New York, issued a warrant through Interpol for the arrest of Sevan at his home in Cyprus, as well as a warrant for Efraim "Fred" Nadler, a New York businessman who was indicted on charges of channeling the illegal payments to Sevan. Nadler's whereabouts are unknown.[7]

Endnotes

  1. ^ [1]
  2. ^ [2]
  3. ^ The Guardian on Nadhmi Auchi (see also Clearstream scandal)
  4. ^ Colum Lynch and Michelle Garcia (April 15, 2005). "American Indicted In Iraq Oil Probe". The Washington Post.
  5. ^ SIMON ROMERO (April 15, 2005). "Low-Profile Texas Oilman Draws Spotlight for Iraqi Deals". The New York Times.
  6. ^ "Korean arrested on oil-for-food scandal charges". NBC News. Jan 6, 2006.
  7. ^ Colum Lynch (January 17, 2007). "Former U.N. Oil-for-Food Chief Indicted". The Washington Post.

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